India’s ratings reflect Fed tapering fears: Fitch

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SummaryIndia's narrowing current account deficit will not be enough to shield the country from pressures tied to Fed tapering

India's narrowing current account deficit will not be enough to shield the country from pressures tied to Fed tapering, says Fitch Ratings.

However, Fitch adds the spillover effects of the Indian rupee's weakness have not significantly hurt India's creditworthiness and will therefore not trigger any ratings action at this point.

“(India's ratings) already incorporate both the sovereign's vulnerabilities and tolerance for volatility in global financial market conditions,” Fitch said.

India faces difficult transition after rupee decline

The sharp depreciation of the rupee in mid-2013 highlights India's difficult transition following an extended period of low growth, high inflation and a widening in CAD. Fitch Ratings says that the spillover effects of a weaker rupee have not significantly hurt India's creditworthiness, and hence would not trigger any rating action as this point.

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